Michelle Singletary's column in today's Washington Post http://www.washingtonpost.com/wp-dyn/content/article/2008/07/30/AR2008073003013.html points out that the new $7,500 tax incentive in the new housing law is not really a credit, but is essentially a loan administered through the tax code.
The loan would be interest-free, but buyers would have to repay this "credit" to the government starting year two,. She writes:
"The terms would mean a yearly loan payment of $500 for 15 years, or about $41.67 a month.
You have to begin repaying the credit in the second tax year after you purchase the home. If you sell the house before you pay off the credit, the entire amount becomes immediately due. However, if you sell and the gain is less than the credit, then you only have to repay up to the amount of the gain. If the homeowner dies before the credit/loan is repaid, any outstanding amount is forgiven."
It looks like the incentive, while still helpful, may not be as enticing as it originally sounded.
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